Originally published in Entrepreneur Magazine

By Jeff Harbach

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Many entrepreneurs are unclear about the right path to take when raising money for their new business idea, and due to the attention given to venture capital-fueled success stories in the news, many ambitious entrepreneurs set their sights on becoming the next Evan Spiegel (or Snap) without enough thought about what is the right path for them. .

And when it comes to capitalizing your business, venture capital is often not the best route to take.

Venture capital can be great for the company that is looking to build the next rocketship of growth — think of companies like Snap or Lyft. But for lots of smaller businesses, bootstrapping and micro-VC might be a better option.

The cost of starting a company is pretty low — often less than a million dollars. So the initial investment from an angel should take you a long way to building traction.

Kauffman Fellow Samir Kaji sees this all the time in his role as a senior managing director at First Republic Bank. He is also an expert on micro-VCs.

Jeff Harbach is President and CEO of Kauffman Fellows.